Emini ioi Breakout Mode setup testing 2018 range bottom
I will update again at the end of the day.
Pre-Open market analysis
The Emini formed an inside day on Friday. Thursday was an outside day. This is an ioi inside-outside-inside pattern on the daily chart, which is a Breakout Mode setup. It is both a buy and a sell signal bar for today.
But, the rally has lasted 3 weeks and it is in a tight channel. Therefore, the bulls will probably be getting exhausted. Furthermore, the Emini is testing the bottom of the 2018 trading range. This is the sell zone. Consequently, there probably will not be aggressive buying today above Friday’s high.
In addition, because the bull channel is tight, Friday is not a strong sell signal bar. That makes a continuation of the 4 day tight trading range likely today.
Overnight Emini Globex trading
The Emini is down 20 points in the Globex session. If it opens here, it will gap down on the daily chart. Trading below Friday’s low would trigger a sell signal.
But, the 3 week bull channel has been tight. In addition, Friday was a bull day. Both reduce the chance of a big bear day today. Furthermore, the Emini has been in a tight trading range today. This makes another sideways day more likely than a trend day up or down.
The 5 minute chart will gap far below Friday’s close. When there is a big gap up or down on the open, the odds of a trend day increase. A gap down makes a bear trend more likely than a bull trend. But, because of the 4 day tight trading range, a trading range day is still more likely.
When there is a big gap down, the Emini will be far below the EMA. After a 4 day tight trading range, the bears will not want to sell this far below the average price. Also, the bulls will probably not buy aggressively in a 4 day tight trading range.
There is an 80% chance of at least one reversal in the 1st hour. In addition, the Emini will probably be mostly sideways for the 1st 90 minutes. The bulls will try to create a double bottom or wedge bottom for an early low.
However, the bears will try to get a double top or wedge top bear the EMA for an early high. If there is a trading range open, it will reduce the chance of a big trend day up or down.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
EURUSD Forex bull flag in bull channel
The EURUSD daily Forex chart has pulled back for 3 days after breaking above a 2 month trading range. Because it has been making higher lows and highs for 2 months, it is also in a bull channel. The bulls want a bull bar today or tomorrow. They would especially like a big bull bar closing on its high. That would be a strong buy signal bar. It would encourage the bulls and make them more confident that the breakout above the 2 month range will continue higher.
Three consecutive bear bars increase the odds of a swing down. Consequently, today’s close is important. If the bears can create a 3rd consecutive bear day, traders will conclude that the breakout will probably fail. This is particularly true if today becomes a big bear day closing on its low.
Which is more likely? Well, trading ranges constantly disappoint bulls and bears. In addition, the 2 month bull channel is so flat that it is essentially a trading range that is sloped slightly up. As a result, today will probably not be helpful for either the bulls or the bears. That means it will probably close in its middle with a small bull or bear body.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip range overnight. There is no consensus that the price is wrong, or that one side is winning on the daily chart. Day traders have been scalping for 10 pips. Many have been using limit orders.
Because the appearance of the daily chart is important, there is an increased chance of a trend up or down. However, more likely, today will remain quiet and close near the open. This would continue the confusion of the past 2 months. Traders would then to have to wait longer for more information before they will hold for a test of the September high or the November low.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
I will post the chart after the close.
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
End of day summary
After a big gap down, the Emini rallied to the December 10 low. It then traded sideways for the rest of the day. Because today closed above its open, it formed a bull day on the daily chart.
Today formed a pullback on the daily chart. It is a buy signal bar for tomorrow. Since the rally is strong and the November low is a magnet above, the Emini will probably go a little higher.
But, since the daily chart is in a parabolic wedge buy climax, the rally will probably stall this week. Buy climaxes exhaust the bulls and typically lead to several days of sideways to down trading.
See the weekly update for a discussion of the price action on the weekly candlestick chart and for what to expect going into next week.
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Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
I view today as a Low 3, and the last 4 days and today as a rounding top with a high at resistance 2 days ago.
I consider this as indicating the market is probably going lower.
In the daily summary, you say it will probably go higher.
What am I missing?
– Mike
I would understand as that this rally has some 3rd leg up to Nov L, while before it goes there, it stalled at 2600 resistance and need a couple of days sideway to down trading for exhausted bulls to take a break, then pick up more longs to their target.
I think you are mixing together 2 things, overall context and today bull signal bar for tomorrow.
The daily chart is in a parabolic wedge and a sharp rally after a sell climax usually tests down. I have been saying that the region between the February low and the November low is the sell zone. An abrupt reversal can come at any time in a parabolic wedge. However, there are not enough bear bars yet for a credible top and the November low is a magnet above on the monthly chart. So, yes, a reversal down is likely at any point, but the momentum up is good and the magnet above is strong. Consequently, at least slightly higher prices are likely before a 1 – 2 week leg down.